Commission Regulation (EC) No 240/96 of 31 January 1996 on the application of Article 85 (3) of the Treaty to certain categories of technology transfer agreements (Text with EEA relevance)
Modified by
Actconcerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded, 12003T, September 23, 2003
Commission Regulation (EC) No 772/2004of 27 April 2004on the application of Article 81(3) of the Treaty to categories of technology transfer agreements(Text with EEA relevance), 32004R0772, April 27, 2004
Commission Regulation (EC) No 240/96of 31 January 1996on the application of Article 85 (3) of the Treaty to certain categories of technology transfer agreements(Text with EEA relevance)THE COMMISSION OF THE EUROPEAN COMMUNITIES,Having regard to the Treaty establishing the European Community,Having regard to Council Regulation No 19/65/EEC of 2 March 1965 on the application of Article 85 (3) of the Treaty to certain categories of agreements and concerted practicesOJ No 36, 6. 3. 1965, p. 533/65., as last amended by the Act of Accession of Austria, Finland and Sweden, and in particular Article 1 thereof,Having published a draft of this RegulationOJ No C 178, 30. 6. 1994, p. 3.,After consulting the Advisory Committee on Restrictive Practices and Dominant Positions,Whereas:(1)Regulation No 19/65/EEC empowers the Commission to apply Article 85 (3) of the Treaty by regulation to certain categories of agreements and concerted practices falling within the scope of Aricle 85 (1) which include restrictions imposed in relation to the acquisition or use of industrial property rights — in particular of patents, utility models, designs or trademarks — or to the rights arising out of contracts for assignment of, or the right to use, a method of manufacture of knowledge relating to use or to the application of industrial processes.(2)The Commission has made use of this power by adopting Regulation (EEC) No 2349/84 of 23 July 1984 on the application of Article 85 (3) of the Treaty to certain categories of patent licensing agreementsOJ No L 219, 16. 8. 1984, p. 15., as last amended by Regulation (EC) No 2131/95OJ No L 214, 8. 9. 1995, p. 6., and Regulation (EEC) No 556/89 of 30 November 1988 on the application of Article 85 (3) of the Treaty to certain categories of know-how licensing agreementsOJ No L 61, 4. 3. 1989, p. 1., as last amended by the Act of Accession of Austria, Finland and Sweden.(3)These two block exemptions ought to be combined into a single regulation covering technology transfer agreements, and the rules governing patent licensing agreements and agreements for the licensing of know-how ought to be harmonized and simplified as far as possible, in order to encourage the dissemination of technical knowledge in the Community and to promote the manufacture of technically more sophisticated products. In those circumstances Regulation (EEC) No 556/89 should be repealed.(4)This Regulation should apply to the licensing of Member States' own patents, Community patentsConvention for the European patent for the common market (Community Patent Convention) of 15 December 1975, OJ No L 17, 26. 1. 1976, p. 1. and European patentsConvention on the grant of European patents (European Patent Convention) of 5 October 1973. ("pure" patent licensing agreements). It should also apply to agreements for the licensing of non-patented technical information such as descriptions of manufacturing processes, recipes, formulae, designs or drawings, commonly termed "know-how" ("pure" know-how licensing agreements), and to combined patent and know-how licensing agreements ("mixed" agreements), which are playing an increasingly important role in the transfer of technology. For the purposes of this Regulation, a number of terms are defined in Article 10.(5)Patent or know-how licensing agreements are agreements whereby one undertaking which holds a patent or know-how ("the licensor") permits another undertaking ("the licensee") to exploit the patent thereby licensed, or communicates the know-how to it, in particular for purposes of manufacture, use or putting on the market. In the light of experience acquired so far, it is possible to define a category of licensing agreements covering all or part of the common market which are capable of falling within the scope of Article 85 (1) but which can normally be regarded as satisfying the conditions laid down in Article 85 (3), where patents are necessary for the achievement of the objects of the licensed technology by a mixed agreement or where know-how — whether it is ancillary to patents or independent of them — is secret, substantial and identified in any appropriate form. These criteria are intended only to ensure that the licensing of the know-how or the grant of the patent licence justifies a block exemption of obligations restricting competition. This is without prejudice to the right of the parties to include in the contract provisions regarding other obligations, such as the obligation to pay royalties, even if the block exemption no longer applies.(6)It is appropriate to extend the scope of this Regulation to pure or mixed agreements containing the licensing of intellectual property rights other than patents (in particular, trademarks, design rights and copyright, especially software protection), when such additional licensing contributes to the achievement of the objects of the licensed technology and contains only ancillary provisions.(7)Where such pure or mixed licensing agreements contain not only obligations relating to territories within the common market but also obligations relating to non-member countries, the presence of the latter does not prevent this Regulation from applying to the obligations relating to territories within the common market. Where licensing agreements for non-member countries or for territories which extend beyond the frontiers of the Community have effects within the common market which may fall within the scope of Article 85 (1), such agreements should be covered by this Regulation to the same extent as would agreements for territories within the common market.(8)The objective being to facilitate the dissemination of technology and the improvement of manufacturing processes, this Regulation should apply only where the licensee himself manufactures the licensed products or has them manufactured for his account, or where the licensed product is a service, provides the service himself or has the service provided for his account, irrespective of whether or not the licensee is also entitled to use confidential information provided by the licensor for the promotion and sale of the licensed product. The scope of this Regulation should therefore exclude agreements solely for the purpose of sale. Also to be excluded from the scope of this Regulation are agreements relating to marketing know-how communicated in the context of franchising arrangements and certain licensing agreements entered into in connection with arrangements such as joint ventures or patent pools and other arrangements in which a licence is granted in exchange for other licences not related to improvements to or new applications of the licensed technology. Such agreements pose different problems which cannot at present be dealt with in a single regulation (Article 5).(9)Given the similarity between sale and exclusive licensing, and the danger that the requirements of this Regulation might be evaded by presenting as assignments what are in fact exclusive licenses restrictive of competition, this Regulation should apply to agreements concerning the assignment and acquisition of patents or know-how where the risk associated with exploitation remains with the assignor. It should also apply to licensing agreements in which the licensor is not the holder of the patent or know-how but is authorized by the holder to grant the licence (as in the case of sub-licences) and to licensing agreements in which the parties' rights or obligations are assumed by connected undertakings (Article 6).(10)Exclusive licensing agreements, i.e. agreements in which the licensor undertakes not to exploit the licensed technology in the licensed territory himself or to grant further licences there, may not be in themselves incompatible with Article 85 (1) where they are concerned with the introduction and protection of a new technology in the licensed territory, by reason of the scale of the research which has been undertaken, of the increase in the level of competition, in particular inter-brand competition, and of the competitiveness of the undertakings concerned resulting from the dissemination of innovation within the Community. In so far as agreements of this kind fall, in other circumstances, within the scope of Article 85 (1), it is appropriate to include them in Article 1 in order that they may also benefit from the exemption.(11)The exemption of export bans on the licensor and on the licensees does not prejudice any developments in the case law of the Court of Justice in relation to such agreements, notably with respect to Articles 30 to 36 and Article 85 (1). This is also the case, in particular, regarding the prohibition on the licensee from selling the licensed product in territories granted to other licensees (passive competition).(12)The obligations listed in Article 1 generally contribute to improving the production of goods and to promoting technical progress. They make the holders of patents or know-how more willing to grant licences and licensees more inclined to undertake the investment required to manufature, use and put on the market a new product or to use a new process. Such obligations may be permitted under this Regulation in respect of territories where the licensed product is protected by patents as long as these remain in force.(13)Since the point at which the know-how ceases to be secret can be difficult to determine, it is appropriate, in respect of territories where the licensed technology comprises know-how only, to limit such obligations to a fixed number of years. Moreover, in order to provide sufficient periods of protection, it is appropriate to take as the starting-point for such periods the date on which the product is first put on the market in the Community by a licensee.(14)Exemption under Article 85 (3) of longer periods of territorial protection for know-how agreements, in particular in order to protect expensive and risky investment or where the parties were not competitors at the date of the grant of the licence, can be granted only by individual decision. On the other hand, parties are free to extend the term of their agreements in order to exploit any subsequent improvement and to provide for the payment of additional royalties. However, in such cases, further periods of territorial protection may be allowed only starting from the date of licensing of the secret improvements in the Community, and by individual decision. Where the research for improvements results in innovations which are distinct from the licensed technology the parties may conclude a new agreement benefitting from an exemption under this Regulation.(15)Provision should also be made for exemption of an obligation on the licensee not to put the product on the market in the territories of other licensees, the permitted period for such an obligation (this obligation would ban not just active competition but passive competition too) should, however, be limited to a few years from the date on which the licensed product is first put on the market in the Community by a licensee, irrespective of whether the licensed technology comprises know-how, patents or both in the territories concerned.(16)The exemption of territorial protection should apply for the whole duration of the periods thus permitted, as long as the patents remain in force or the know-how remains secret and substantial. The parties to a mixed patent and know-how licensing agreement must be able to take advantage in a particular territory of the period of protection conferred by a patent or by the know-how, whichever is the longer.(17)The obligations listed in Article 1 also generally fulfil the other conditions for the application of Article 85 (3). Consumers will, as a rule, be allowed a fair share of the benefit resulting from the improvement in the supply of goods on the market. To safeguard this effect, however, it is right to exclude from the application of Article 1 cases where the parties agree to refuse to meet demand from users or resellers within their respective territories who would resell for export, or to take other steps to impede parallel imports. The obligations referred to above thus only impose restrictions which are indispensable to the attainment of their objectives.(18)It is desirable to list in this Regulation a number of obligations that are commonly found in licensing agreements but are normally not restrictive of competition, and to provide that in the event that because of the particular economic or legal circumstances they should fall within Article 85 (1), they too will be covered by the exemption. This list, in Article 2, is not exhaustive.(19)This Regulation must also specify what restrictions or provisions may not be included in licensing agreements if these are to benefit from the block exemption. The restrictions listed in Article 3 may fall under the prohibition of Article 85 (1), but in their case there can be no geenral presumption that, although they relate to the transfer of technology, they will lead to the positive effects required by Article 85 (3), as would be necessary for the granting of a block exemption. Such restrictions can be declared exempt only by an individual decision, taking account of the market position of the undertakings concerned and the degree of concentration on the relevant market.(20)The obligations on the licensee to cease using the licensed technology after the termination of the agreement (Article 2 (1) (3)) and to make improvements available to the licensor (Article 2 (1) (4)) do not generally restrict competition. The post-term use ban may be regarded as a normal feature of licensing, as otherwise the licensor would be forced to transfer his know-how or patents in perpetuity. Undertakings by the licensee to grant back to the licensor a licence for improvements to the licensed know-how and/or patents are generally not restrictive of competition if the licensee is entitled by the contract to share in future experience and inventions made by the licensor. On the other hand, a restrictive effect on competition arises where the agreement obliges the licensee to assign to the licensor rights to improvements of the originally licensed technology that he himself has brought about (Article 3 (6)).(21)The list of clauses which do not prevent exemption also includes an obligation on the licensee to keep paying royalties until the end of the agreement independently of whether or not the licensed know-how has entered into the public domain through the action of third parties or of the licensee himself (Article 2 (1) (7)). Moreover, the parties must be free, in order to facilitate payment, to spread the royalty payments for the use of the licensed technology over a period extending beyond the duration of the licensed patents, in particular by setting lower royalty rates. As a rule, parties do not need to be protected against the foreseeable financial consequences of an agreement freely entered into, and they should therefore be free to choose the appropriate means of financing the technology transfer and sharing between them the risks of such use. However, the setting of rates of royalty so as to achieve one of the restrictions listed in Article 3 renders the agreement ineligible for the block exemption.(22)An obligation on the licensee to restrict his exploitation of the licensed technology to one or more technical fields of application ("fields of use") or to one or more product markets is not caught by Article 85 (1) either, since the licensor is entitled to transfer the technology only for a limited purpose (Article 2 (1) (8)).(23)Clauses whereby the parties allocate customers within the same technological field of use or the same product market, either by an actual prohibition on supplying certain classes of customer or through an obligation with an equivalent effect, would also render the agreement ineligible for the block exemption where the parties are competitors for the contract products (Article 3 (4)). Such restrictions between undertakings which are not competitors remain subject to the opposition procedure. Article 3 does not apply to cases where the patent or know-how licence is granted in order to provide a single customer with a second source of supply. In such a case, a prohibition on the second licensee from supplying persons other than the customer concerned is an essential condition for the grant of a second licence, since the purpose of the transaction is not to create an independent supplier in the market. The same applies to limitations on the quantities the licensee may supply to the customer concerned (Article 2 (1) (13)).(24)Besides the clauses already mentioned, the list of restrictions which render the block exemption inapplicable also includes restrictions regarding the selling prices of the licensed product or the quantities to be manufactured or sold, since they seriously limit the extent to which the licensee can exploit the licensed technology and since quantity restrictions particularly may have the same effect as export bans (Article 3 (1) and (5)). This does not apply where a licence is granted for use of the technology in specific production facilities and where both a specific technology is communicated for the setting-up, operation and maintenance of these facilities and the licensee is allowed to increase the capacity of the facilities or to set up further facilities for its own use on normal commercial terms. On the other hand, the licensee may lawfully be prevented from using the transferred technology to set up facilities for third parties, since the purpose of the agreement is not to permit the licensee to give other producers access to the licensor's technology while it remains secret or protected by patent (Article 2 (1) (12)).(25)Agreements which are not automatically covered by the exemption because they contain provisions that are not expressly exempted by this Regulation and not expressly excluded from exemption, including those lsited in Article 4 (2), may, in certain circumstances, nonetheless be presumed to be eligible for application of the block exemption. It will be possible for the Commission rapidly to establish whether this is the case on the basis of the information undertakings are obliged to provide under Commission Regulation (EC) No 3385/94OJ No L 377, 31. 12. 1994, p. 28.. The Commission may waive the requirement to suply specific information required in form A/B but which it does not deem necessary. The Commission will generally be content with communication of the text of the agreement and with an estimate, based on directly available data, of the market structure and of the licensee's market share. Such agreements should therefore be deemed to be covered by the exemption provided for in this Regulation where they are notified to the Commission and the Commission does not oppose the application of the exemption within a specified period of time.(26)Where agreements exempted under this Regulation nevertheless have effects incompatible with Article 85 (3), the Commission may withdraw the block exemption, in particular where the licensed products are not faced with real competition in the licensed territory (Article 7). This could also be the case where the licensee has a strong position on the market. In assessing the competition the Commission will pay special attention to cases where the licensee has more than 40 % of the whole market for the licensed products and of all the products or services which customers consider interchangeable or substitutable on account of their characteristics, prices and intended use.(27)Agreements which come within the terms of Articles 1 and 2 and which have neither the object nor the effect of restricting competition in any other way need no longer be notified. Nevertheless, undertakings will still have the right to apply in individual cases for negative clearance or for exemption under Article 85 (3) in accordance with Council Regulation No 17OJ No 13, 21. 2. 1962, p. 204/62., as last amended by the Act of Accession of Austria, Finland and Sweden. They can in particular notify agreements obliging the licensor not to grant other licences in the territory, where the licensee's market share exceeds or is likely to exceed 40 %,HAS ADOPTED THIS REGULATION: